Open banking: opening the door to safer, faster, and more responsible iGaming
Betting, gambling, and payments have always been inextricably intertwined. But, while the gambling industry has kept up pace with the rest of society, becoming increasingly digitalized, banks and payment systems have been lagging behind in terms of the speed at which payments are made – but are they finally catching up?
We spoke to Christian Reinheimer, Group Director of Payments at LeoVegas, to get the lowdown on the latest payment trends in the iGaming industry. With confidence, Christian said “Two words: open banking.”
Historically, banks held exclusive rights to all their customer data, and were –unsurprisingly – not willing to share it. A new EU directive drastically changed this in 2015, forcing banking institutions to be less conservative and adopt a digital approach, opening their systems to third parties: “The PSD2 directive meant that banks were no longer allowed to harbor customer data in their vaults.”
Since then, a whole new ecosystem of companies and services that use this banking data has emerged: from apps that help users with their monthly savings, to companies handling instant payments. Sending money instantly from a personal bank account in, for instance, Germany to an account in Finland is now the norm. Traditionally, international transactions took several days and parties struggled with seemingly endless numbers, such as IBAN. Today, you are only a couple of swipes away from finalizing a transaction.
“How does open banking affect me? For starters, payments are safer for everyone. Credit and debit cards are prone to being stolen, copied, or skimmed.” And fraud causes a lot of headaches for payment companies. “Chargebacks – meaning when a cardholder challenges a transaction – are not only an annoyance for the customer but also a potential financial loss for the merchant,” explains Christian.
“With open banking payment solutions, card frauds and chargebacks are no more, since funds are instantly transferred from the customer’s bank account to the company’s, and vice versa. Seeing that most, if not all, EU citizens have a bank account, due diligence – such as identification processes – have already been performed by banks. In essence, it’s safer for all parties“.
Safe and swift payment options are gathering speed
When the open banking payment solution accesses the bank’s data, it instantly ensures that the person using the device is also the bank account holder. This is a boost to companies’ risk management and anti-money laundering efforts vital for casino and iGaming operators such as LeoVegas.
“Today, many banks and most devices use biometric data such as fingerprints and face scans instead of passwords. Piggy-backing off of these enhancements and implementing them in our own digital environments will greatly enhance safety for all parties”.
LeoVegas’ position has always been “King of mobile casino”, and the group has consistently strived to offer the greatest gaming experience. Being at the forefront of fintech, payments and other technical solutions is a crucial part of this.
Last year, the Group became the first in its sector to begin rolling out open banking-powered payment options in the UK. Open banking payments are now the third most used method for LeoVegas’ UK players, and the runner-up when it comes to new depositing customers. “Today, we’re seeing that 20 to 30 percent of our depositing customers are actively choosing open banking methods instead of opting for traditional methods such as credit cards and eWallets. Open banking is really gathering speed as the payment method of choice”. Consequently, other digital payment options have dropped. Instant transactions, combined with ease of use with mobile devices, are key benefits that attract customers to the new methods.
All LeoVegas Group UK brands now offer open banking payments and the group is rolling the option out in other markets (Ireland and Spain are up next), making payment substantially easier for more and more customers.
The best is yet to come
For LeoVegas, secure, instant payments are just the tip of the iceberg in terms of how open banking can be applied. Combining payments and open banking data with their in-house AI and risk prediction models will allow safer gambling interventions to be personalised; source of income verifications will be instant; and customers’ gambling habits can be assessed more accurately by responsible gambling teams.
iGaming has never been as responsibly controlled and secure as it is today – and, thanks to new technologies like open banking, there is much more to come.